ReShape Lifesciences Inc., a maker of weight-loss implants, has decided it not only needs to slim down, it needs a partner.
On March 4, the Irvine-based medical device company (Nasdaq: RSLS) announced a cost-reduction plan to reduce operating expenses 55% to $7.9 million this year.
“Our continued focus on restructuring is intended to ensure the long-term sustainability and scalability of the company,” Chief Executive Paul Hickey said in a statement.
“We continue our high priority search for synergistic M&A opportunities,” he said. “Finding the right partner will be key to the long-term success of ReShape Lifesciences.”
The company makes products designed to help patients lose weight. It says obesity affects more than 2.5 billion adults and could increase 50% by 2030, citing the World Health Organization.
ReShape estimated the Bariatric Surgical Device market will be a $2.8 billion worldwide market by 2025.
The ‘Lap-Band’
The medical device maker traces its origins to Minnesota, where it was founded in 2002; in 2017, it acquired ReShape Medical, which was a San Clemente-based obesity device maker at the time. It not only took the latter’s name, it also moved its headquarters to that city.
Last year, it moved to Irvine.
The company’s portfolio includes a Food and Drug Administration approved “Lap-Band” system that provides minimally invasive, long-term treatment of obesity. The company said it’s a safer surgical alternative to “extreme surgical stapling procedures such as the gastric bypass or sleeve gastrectomy.”
The Lap-Band system is placed around the upper part of the stomach through small incisions, creating a small pouch at the top of the stomach, which slows the passage of food and creates a sensation of fullness. It helps patients lose 65% of their excess weight in their first year, the company said.
A problem for the company is the growing popularity of GLP-1 prescriptions for weight-loss treatment, which caused it to begin cost reductions last October. CEO Hickey said such drugs are limited in use.
“Given the growing body of evidence pointing to the fact that weight loss due to GLP-1 usage has limitations related to weight loss, co-morbidities, and accessibility, we believe that the market opportunity for the Lap-Band will increase,” Hickey said in a statement last October.
In February, the company announced doctors successfully performed the first surgeries utilizing the company’s next generation, Lap-Band 2.0 Flex.
“The first surgeries utilizing the Lap-Band 2.0 Flex mark, not only a seminal moment in the company’s launch of this enhanced product, but also a leap forward in improving the Lap-Band patient experience,” Hickey said in February.
The company also sells Obalon, a nonsurgical, swallowable, gas-filled intra-gastric balloon that is designed to provide long-lasting weight loss.
Revenue in the first nine months last year declined 17% to $6.7 million while its adjusted loss was $12 million.
In the past year, it’s cut its headcount in half to its current 20.
Since 2017, the company’s shares have steadily fallen from more than $20,000 each to about 17 cents and a $3.9 million market cap.
